Information and FAQ
During the past few years, we have compiled the following list of commonly-asked questions asked by people who are considering setting up their own company.
What is a Limited Liability Company?
Limited Liability Companies are the most common business vehicle in New Zealand and in most western countries around the world. They were invented to recognise that a person should be able to own shares in a company without having to accept all of the risks associated with that company operating in the marketplace.
A Limited Liability Company (sometimes referred to as a "Registered Company" or an "Incorporated Company") is a company which has been registered with the New Zealand Ministry of Economic Development. It is a company where the liability (risk) of the shareholders is limited to only the amount of money and assets they have put into the business (hence the term limited liability).
So long as the shareholders and/or directors of a company have not done anything illegal or negligent, a shareholder of a Limited Liability Company cannot be made to pay out of there own pocket for the debts of the company.
Registration of a Limited Liability Company also protects the (exact) business name from being used by another company, as well as providing the shareholders with various tax benefits.
What is the difference between a Limited Liability Company and a Sole Trader or Partnership?
A Sole Trader is a person who operates a business without registering it as a Limited Liability Company. They personally carry all of the risk for the operation of their company. A Sole Trader has no protection for their company name and no access to the tax advantages of a Limited Liability Company.
A Partnership is a firm with two or more Sole Traders who cooperate together to run their business. Each partner carries the burden of their own financial risk (as a Sole Trader) in addition to the financial risks generated by their partners.
Does a Limited Liability Company protect me from somebody who uses my business name and/or logo?
A Limited Liability Company is not a trademark. When you have a Limited Liability Company, the exact name of your company cannot be used by another firm, however the only way to ensure complete protection for your company name and/or logo is to register them as trademarks. Unfortunately, this is a fairly expensive and complex exercise.
How do I find out if the company name I want is already in use by another firm in New Zealand?
It is important to check that your preferred company name isn't already being used by another business in New Zealand before you go to the expense of printing business cards, letterhead and advertising material.
A name-checking service is provided for free to Express Biz clients.
Simply email your name and company-name preferences to expressbiz@companynet.co.nz and we'll email you back with the results of our search.
Do I need a PO Box, multiple Directors and a prescribed Capital Injection in order to set up a Limited Liability Company?
In some parts of the world, all of these things are needed to form a company. Thankfully none of them are needed in New Zealand.
You'll need a New Zealand address (most people use their home address), at least one Director and one Shareholder (they can be the same person).
The company can be formed without the need for a compulsory deposit of cash. It doesn't even have to open a bank account, although most do, for obvious reasons.
Can I set up a New Zealand company while I am overseas and can I set up an Australian Company while I am still in New Zealand?
The simple answer to this question is YES. It is possible (and totally legal) to set up companies in other countries.
It is considerably more expensive to set up companies in countries other than New Zealand. For example Australians pay around $1500 to form a company!
Can I form a company with one name and trade under another name?
You can trade under a different name than your registered company name.
You are required to inform everybody on your letterhead, business cards and invoices etc that you are trading under a different name. This is usually done by adding the words (for example) "The Funny Business Company Limited trading as "Funny Biz".
There is no protection for you or anybody else when using a trading name which is not your registered company name, unless you go to the trouble of registering a trademark.
How do I go about setting up a Limited Liability Company?
You can start the process of forming your Limited Liability Company from the home page of the Express Biz website.
It's simple, quick and painless! All the paperwork, legal documentation, payment of government fees and (if you want) IRD & GST registration is done for you by Express Biz.
Your business will be up and running, with all the correct documentation to make it legal, in as little as 24 hours.
What do I receive from Express Biz?
Once your Limited Liability Company is formed, we will courier to you a Company Folder, specific to your company which will include (the legally required) Opening Company Minutes and blank templates for future minutes, Company Registers (there are 16 of these), a standard Company Constitution and an informative booklet regarding Director's statutory obligations in New Zealand.
